wazua Sat, Nov 30, 2024
Welcome Guest Search | Active Topics | Log In | Register

2 Pages<12
Basle 2 and Basel 3
Options
Previous Topic · Next Topic
Scooby
#21 Posted : Tuesday, September 28, 2010 7:46:40 PM
Rank: Member


Joined: 9/2/2006
Posts: 121
@ Wa_ithaka,

If you follow whats going on in Europe and Dubai, the Tier I capital that banks held was insufficient to support the huge losses had incurred since 2007.

As a result, holders of debt being asked if they could give up some of their principal for the sake of the bank....but they refused (this was the main issue with the Dubai crisis). So, Basel had to rewrite the capital requirements.

Another thing to clarify for you....the capital requirement under Pillar III is already taking into account all the possible risks that could be indentified under Basel II (especially under Pillar II).

Prior to Basel III being Basel III (forgive me the pun), it was initally referred to as Basel 2.5
Back to top
 Report Abusive | Report SPAM
Wa_ithaka
#22 Posted : Tuesday, September 28, 2010 7:55:03 PM
Rank: Veteran


Joined: 1/7/2010
Posts: 1,279
Location: nbi
Scooby- your pt is?
The Governor of Nyeri - 2017
Back to top
 Report Abusive | Report SPAM
Scubidu
#23 Posted : Tuesday, September 28, 2010 8:41:06 PM
Rank: Veteran


Joined: 9/4/2009
Posts: 700
Location: Nairobi
@wai. What is the the motivation for improved risk modelling? Do you think that our banks or our market requires more sophisticated risk management? I don't know, I'm just curious. The question asked what can banks do to become compliant. I'd assume they'd need to build capital, train their staff and invest in technology. All these measure seem to be long term in nature, but from a capital stand-point we're pretty much okay. Our banks survived the '08 crisis unscathed.
“We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
Back to top
 Report Abusive | Report SPAM
Scooby
#24 Posted : Tuesday, September 28, 2010 9:17:36 PM
Rank: Member


Joined: 9/2/2006
Posts: 121
Wa_ithaka wrote:
Scooby- your pt is?


Wa_itahaka,

Weren't you asking why Basel III has a stricter capital requirement...don't start being arrogant/rude on me!!
Back to top
 Report Abusive | Report SPAM
VituVingiSana
#25 Posted : Tuesday, September 28, 2010 10:54:19 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,098
Location: Nairobi
The problem is... if there is systemic problem (esp take real estate in Kenya) then the Tier 1 capital can easily be wiped out! Say there is a 8% Tier 1 level (No Tier 2) with a Loan-to-Deposits ratio of 80% of which 50% is in real estate.

So a loss of 20-30% of the Real Estate book could wipe out the Tier 1 Capital. Not unheard of. See USA/UK...
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Back to top
 Report Abusive | Report SPAM
guru267
#26 Posted : Tuesday, September 28, 2010 11:05:22 PM
Rank: Elder


Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
VituVingiSana wrote:
The problem is... if there is systemic problem (esp take real estate in Kenya) then the Tier 1 capital can easily be wiped out! Say there is a 8% Tier 1 level (No Tier 2) with a Loan-to-Deposits ratio of 80% of which 50% is in real estate.

So a loss of 20-30% of the Real Estate book could wipe out the Tier 1 Capital. Not unheard of. See USA/UK...

With a housing deficit the way it is there is ABSOLUTELY no room for a real estate crash in kenya..

Mark 12:29
Deuteronomy 4:16
Back to top
 Report Abusive | Report SPAM
VituVingiSana
#27 Posted : Tuesday, September 28, 2010 11:58:50 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,098
Location: Nairobi
guru267 wrote:
VituVingiSana wrote:
The problem is... if there is systemic problem (esp take real estate in Kenya) then the Tier 1 capital can easily be wiped out! Say there is a 8% Tier 1 level (No Tier 2) with a Loan-to-Deposits ratio of 80% of which 50% is in real estate.

So a loss of 20-30% of the Real Estate book could wipe out the Tier 1 Capital. Not unheard of. See USA/UK...

With a housing deficit the way it is there is ABSOLUTELY no room for a real estate crash in kenya..

Never Say Never...
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Back to top
 Report Abusive | Report SPAM
Wa_ithaka
#28 Posted : Wednesday, September 29, 2010 1:15:58 PM
Rank: Veteran


Joined: 1/7/2010
Posts: 1,279
Location: nbi
Scooby-don't think I was. I was actually referring an uninformed post saying Kenyan banks were fully compliant with Basel2 and BAsel 3.
Scubidu-please note that hii maneno ya surviving 2008 unscathed is not strictly true. All the banks recorded lower earnings/profits. On your 2nd point around what compliance means. At a basic level, all kenyan banks should be identifying, measuring and holding capital against the Pillar 1 risks of Basel 2. Plse note that the menu of approaches offered under Basel 2 is such that, it just requires better data and due diligence.
VVS-thanks for some reality check. You know US/UK banks used to say that the had the most sophisicated risk management systems dunia nzima. Until credit crunch happened. We all know better.
The Governor of Nyeri - 2017
Back to top
 Report Abusive | Report SPAM
Users browsing this topic
Guest
2 Pages<12
Forum Jump  
You cannot post new topics in this forum.
You cannot reply to topics in this forum.
You cannot delete your posts in this forum.
You cannot edit your posts in this forum.
You cannot create polls in this forum.
You cannot vote in polls in this forum.

Wazua Investor Theme
Powered by YAF | YAF © 2003-2009, Yet Another Forum.NET
Copyright © 2024 Wazua.co.ke. All Rights Reserved.